Anger as US refuses to waive corn ethanol mandate

By Carina Perkins

- Last updated on GMT

Anger as US refuses to waive corn ethanol mandate
The US livestock industry has slammed a government decision not to waive the mandate on corn ethanol production, warning that the policy would cause food costs to soar in coming months.

The US Environmental Protection Agency (EPA) announced last week that it had not found sufficient evidence that granting a waiver of the Renewable Fuels Standard (RFS) would cause severe economic harm, adding that economic analyses conducted in conjunction with the US Department of Agriculture (USDA) and US Department of Energy (DOE) had revealed that waiving the mandate would only reduce corn prices by 1%.

“We recognise that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,”​ said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. “But our extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact.”

However, a statement from a coalition of US livestock, poultry and dairy groups claimed the EPA was in “denial”​ and insisted that the RFS mandate – which requires 13.8 billion gallons of corn-based ethanol to be blended into gasoline in 2013 – was creating an animal feed crisis and putting livestock farmers out of business.

“We are extremely frustrated and discouraged that the EPA chose to ignore the clear economic argument from tens of thousands of family farmers and livestock and poultry producers that the food-to-fuel policy is causing, and will cause, severe harm to regions in which those farmers and producers operate,”​ said the statement. “How many more jobs and family farms have to be lost before we change this misguided policy and create a level playing field on the free market for the end-users of corn?”

A separate statement from the National Cattlemen’s Beef Association (NCBA) predicted that 500,000 head of beef cow and 50,000 head of dairy cow would be liquidated this year alone as a result of rising feed costs. It branded the EPA’s refusal to grant the waiver as “a blatant example of the flawed policy of the RFS”​.

NCBA president JD Alexander said: “Our message to the EPA and Administrator Jackson is ‘how bad does it have to get for livestock producers before relief is brought to rural America?’ Cattlemen and women are only asking for a level playing field. With the EPA’s refusal to grant a waiver when faced with these conditions, it is clear the RFS is not working as Congress intended.”

According to the latest USDA crop report, the US corn harvest is down 13% year-on-year to 10.7 billion bushels. Carry-over stocks for 2012-13 are forecast to be 35% down on last year’s levels, which would leave the livestock industry vulnerable if there is another poor harvest.

“We now have about one-third less of the corn that we need to adequately supply animal feed, ethanol, exports and sufficient carry-over levels,”​ said the coalition. “But the government continues to mandate that a significant amount of the corn supply be blended next year into gasoline.”

The EPA decision not to exercise its power to grant a waiver of the RFS came despite petitions from 34 US senators, 156 House of Representatives members and nine governors, as well as livestock groups.

Related topics: Industry & Markets

Related news